23 September 2023
The global seaborne commodities trading map continues to rebuild at a blistering pace. This results from the wake of the Russian invasion of Ukraine two weeks ago. Hence there is a sudden spike in port congestion
On March 8th, the United States announced a ban on Russian oil and other energy imports.
“We’re banning all imports of Russian oil and gas and energy… That means Russian oil will no longer be acceptable at US ports and the American people will deal another powerful blow to Putin’s war machine.”Joe Biden, US President
This will apply only to energy imports into the US. In the meantime, the UK intends to implement such a ban “by the end of the year”. Other European allies will not join the US in the ban as expected, at least for the time being.
German chancellor Olaf Scholz said that; although Berlin supported tough measures against Moscow, Russian energy supplies remained “essential” for daily life in Europe.
Russia’s supply effect
In 2021, Russia exported 8.2m tonnes of crude oil to the US. This represented 3.9% of Russia’s seaborne crude exports and less than 3% of Russia’s total crude exports including pipelines. To compare, in the same year, Russia exported 114.2m tonnes of crude oil to the European Union. Thus, accounting for 53.9% of Russia’s seaborne crude exports, plus an additional 40m tonnes by pipeline.
Last year, Russia exported 4.3m tonnes of clean oil products to the US, which represented 6% of Russia’s seaborne clean products exports. In the same year, Russia exported 41.9m tonnes of clean oil products to the EU, accounting for 57.9% of Russia’s seaborne clean products exports. Russia did not export any natural gas to the US at all last year while shipping 12.1m tonnes of LNG to the EU. Additionally, it supplied three times as much by pipeline.
“Whilst a ban on Russian energy exports to the USA is significant, it’s a drop in the ocean compared to the trade between Russia and the European Union, which remains the much bigger prize,”Ralph Leszczynski, Bancosta Research.
The European Commission yesterday outlined plans to rid the continent’s dependency on Russian natural gas by 2/3 by the end of the year, in a plan called REPowerEU.
Meanwhile, the war and subsequent sanctions are seeing ships and cargoes pile up at ports across Europe. Leading liners – with the notable exception of COSCO – have stopped calling Russia and its ally Belarus.
Israeli maritime data firm Windward has since detected a spike in port congestion across most of Europe, as many containerships reroute. Ports in Cyprus, Bulgaria, Latvia, and Finland are experiencing a sudden spike in port congestion of between 40 to 80%.
Alphaliner reported that the withdrawal of shipping services calling at Russia and Ukraine is resulting in a significant re-routing of cargoes. Hence, exacerbating the backlog of containerized freight in ports and terminals. In the meantime, many of them are already suffering from severe congestion problems.
“More congestion means more shipping capacity held up, and further pressure on the supply of tonnage, which can only contribute to keeping charter rates at sky-high levels,”Alphaliner
“Due to ongoing disruption to shipping in the Black Sea we expect container build-ups at ports to exacerbate at storage areas across the region.”Christian Roeloffs, co-founder and CEO of Container xChange
One of the big changes in regional trading patterns in dry bulk detected in the Black Sea. Particularly, a very big buildup of bulk carriers anchored off Constanza, a Romanian port.
Earlier this week, London’s marine insurance market widened the area of waters around the Black Sea and Sea of Azov that it deems high risk. The Joint War Committee (JWC) said that the high-risk area had been widened to waters close to Romania and Georgia. Note that, initially added Russian and Ukrainian waters in the Black Sea and the Sea of Azov last month.
InterManager, the global ship management association, gave details of the abandonment of 4 stranded ships over the weekend. While also, how the crew was successfully evacuated. There remain numerous ships’ crews still stuck in Ukrainian waters. While embassies working to get them out of the war zone. InterManager advised that the crew evacuation is achievable via Moldova, Romania or Poland.
Furthermore, the government of Poland has allowed Ukrainians to open bank accounts. InterManager has suggested that this could be a way forward for solving the payment situation of Ukrainian seafarers.
Finally, in today’s Ukrainian conflict shipping news roundup; the state-run Bangladesh Shipping Corporation (BSC) has made an insurance claim worth $22.8m dollars for the Banglar Samriddhi. A bulk carrier was abandoned in Ukraine after a rocket attack. Unfortunately, the attack killed the ship’s third engineer, Hadisur Rahman. The remaining 28 crew were evacuated to Romania.